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Oxy Shifting Focus to Northern Delaware in 2H17 After Adding 57% More Rigs

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Occidental released its Q2 results where it focused primarily on its long term plans.

Highlights Include:

• Total average daily production volumes were 601,000 boe for Q2 2017, up just 1% from the 594,000 boe in Q1
• Increased rig count from 7 at the end of Q1 to 11 at the end of Q2, an increase of about 57%
• Activity in the next several years will be primarily in the Delaware - shifting rigs to New Mexico
• Expects to achieve full year guidance of adding 400 locations, with a stretch goal of adding 600

Occidental changed its full year guidance to 597,000-605,000 boe/d from a prior guidance of 595,000-615,000 boe/d. The company raised the low end of the guidance to reflect the new production increase from Permian transactions and lowered the high end due to uncertainties surrounding several events, including OPEC and electrical storms in the Permian. 

In the Permian, Oxy added 255 locations. Additionally, the company utlizied advance subsurface characterization in Barilla Draw which resulted in a company record 3,200 boe/d in the Wolfcamp A.

In the second half of the year, Oxy plans to operate 5 rigs in the Greater Sand Dunes area, 4 rigs in Great Barilla Draw, and 2 in the Midland.

The company is shifting rigs to New Mexico because there are very high returns in the area and the stack pace is better there. Heading into New Mexico, the company is working with mostly clean acreage where it will have a chance to freely develop the land. 

The company also discussed several of its technology solutions. Oxy is currently pushing out its bit trajectory data analytics tool that allows the bit to stay in the zone and allows the operator to build curves more accurately. Staying in the zone longer gives better well results.